Social Security File & Suspend Deadline is Approaching
April 29 is the Last Day to Suspend Retirement Benefits Under Current Rules
The Social Security Administration recently announced a major shift for retirees that is slated to take effect this spring under the Bipartisan Budget Act of 2015. Under current rules, retirees aged 66 and older have the option to defer Social Security retirement benefit payments until the age of 70 without deferring others’ benefit payments, such as those paid to a spouse or child. Starting on April 30, however, those who voluntarily suspend their retirement benefits will no longer be permitted to have other beneficiaries, such as a spouse or child, receive benefits during the same period. Anyone who suspends his or her benefits after the age of 66 will also no longer be eligible to receive benefits on another’s record.
Here are the specific changes that will take effect on April 30:
The Social Security Administration will no longer allow the suspension of retroactive benefits when an individual applies for benefits, but when no determination has been made regarding his or her entitlement. Those who voluntarily defer their retirement benefits will no longer be permitted to have other beneficiaries on their record, such as spouses or children, receive benefits during the same time period. The only exception is for divorced spouses who were married at least 10 years. Those who voluntarily defer their Social Security benefits will no longer be eligible to receive benefits on someone else’s record. Part B premiums cannot be deducted from suspended benefits. Any requests for voluntary suspension of benefits on or after April 30 will begin the month following the month of the request.
Here’s what will not change:
The new rules also have no impact on survivor benefits which are separate. Divorced spouses married a minimum of 10 years may still collect benefits on an ex-spouse’s earnings record. This will not change even if the former spouse files to defer payments after the April 29 deadline.
How to File Under Current Law by April 29:
All requests filed by April 29 are subject to current rules, which allows individuals to request a lump sum payment of suspended benefits instead of deferred retirement credits, so those looking to take advantage of the current regulations should act soon.
The simplest way to request a suspension of retirement payments, excepting other benefits such as spousal benefits or those paid to a dependent, is to file online at www.ssa.gov by April 29.
In the past, online forms from the Social Security Administration have not clearly indicated that suspension of payments is possible through online submission. The simplest way to bypass this issue is to request that benefits begin at age 66, then clearly state in the remarks section that you wish to defer retirement benefits until a later date. This may seem a bit paradoxical, but the method accomplishes the desired goal of filing for some benefits while deferring retirement payments.
We also recommend that those seeking to delay retirement benefits but trigger spousal benefits check “yes” beside the question that reads “If you are eligible for both retirement benefits and spouse’s benefit, do you want to delay receipt of retirement benefits?” It should be noted that those who file in this manner will need to apply for individual retirement benefits when they wish to start receiving them.
You may also email the Social Security Administration to voice your thoughts on how the online form can be improved by emailing firstname.lastname@example.org.
If you have any questions about how this new rule impacts you, contact FMB Wealth Management, and we would be happy to assist you navigate the new rule changes in the most beneficial way for you and your family.